GCG10

I flagged a minor rally target at 1111.10 in the chat room yesterday afternoon, predicated on a push above its sibling midpoint, 1107.10.  Well, the midpoint is toast, the futures having climbed as high as 1108.80, but buyers have since turned skittish.  The pullback remains shallow so far nonetheless, and I would suggest that night owls loiter on the 1- and 3-minute charts to pick up on the kind of subtle ABC rally pattern with the potential to get one aboard without much risk. ______ UPDATE:  This morning's moderate rally exceeded the first peak mentioned in today's commentary (1110.90)  but not the second (1118.50). This is telling, as far as I'm concerned -- indicative of buying that lacks the power and inspiration to see its way to new all-time highs soon.  You might say that the Golden Groundhog has seen its shadow. _______ FURTHER UPDATE (12:01 p.m.): The second peak has now been exceeded, but it is a sign of this rally's lack of confidence that the move to new recovery highs required a B-C pullback on the hourly chart.  Now let's see how the futures handle the next Hidden Pivot resistance at 1127.80, my minimum upside target for now.  Traders should look for an entry opportunity on any pullback to 1113.60, the HP midpoint associated with 1127.80.

Wednesday's moderate weakness changed nothing in the immediate outlook.  A print today above 1104.80 would turn the lesser charts bullish, and that external peak can be used to create a camouflaged entry opportunity if there's a shallow pullback from just above it. However, if the selling continues, look for a potentially tradable bounce from somewhere in the range 1074.50-1075.90.  _______ UPDATE (1:05 p.m. EST):  This morning's breach of the 1074.50-1075.90 bottoming range we've been using spells a 1039.20. A midpoint support at 1071.60 is all that stands between.  For the April contract, that means 1072.50/1040.00.

The mildly chaotic series of ups and downs of the last three days has produced, not dueling impulse legs on the hourly chart, but a preponderance of bearish legs that tips the bias negative for the near term.  Traders can still use a pullback today from just above 1104.80 to get long via "camouflage," since that would be the first speculative sign that Gold is turning around. Alternatively, a move lower would encounter potentially tradable support in the range 1074.50-1075.90.

Officially, February Gold is still headed down to at least 1074.50, but in practice it is putting up too respectable a fight for us to consider the target a done deal. Also in practice, the futures could create a potentially explosive impulse leg with a relatively minor thrust. Notice in the chart that there are three peaks, two of them external, that are spaced just $1.60 apart. An unbroken push surpassing all of them would be just the thing to energize bulls, but they would rampage on a breach of peak number four on the same push. Camouflage entry on a pullback from just above #3 might be possible, but any rally above #4 is bound to be noticed. The trick will be to use a hair-trigger buy-stop to enter if there's a quick, shallow b-c pullback from just above 1104.80.  Alternatively, if bullion falls, a minor midpoint at 1089.90 should evince support, although the pivot doesn't look sufficiently compelling to bottom-fish.

A print today at 1117.50 would turn all of the intraday charts bullish, but any less than that won't significantly diminish the odds of a fall to at least 1075.40 over the near term.  The first point at which I would turn speculatively bullish, however, would be at 1102.00, since a print at that price would refresh the bullish impulse on the lesser charts.  Because the futures appeared bound for a minor, 1102.20 target late Sunday night, traders should look for a camouflage entry opportunity that approximates the pattern shown in the chart. ______ UPDATE (10:30 a.m.): Bulls failed to leverage a move slightly above 1102.20 overnight, and the futures dropped back without triggering a buy signal. More recently, as of 10:27 a.m., they've slightly overshot a 1093.00 downside target and are rebounding sharply. The presumably gratuitous rally, currently at 1097.60, will start to look slightly interesting on the two-minute chart if its hits 1101.10

Brace for more weakness, since it looks like the futures are about to fall to at least 1075.40 over the near term, or perhaps to 1068.00 if any lower.  The latter number, a Hidden Pivot, looks pretty compelling on the 240-minute chart that I've included.  Alternatively, it would take a pop today to 1107.00 to turn the lowly one-minute chart bullish. That would exceed a very subtle look-to-the-left peak recorded yesterday morning on the way down.

My immediate outlook is bearish, but there's not much to work with on the hourly chart to predict how bad the next leg down will be.  Assuming yesterday's bounce from within a tick of the featured pivot at 1106.90 is a distribution, it doesn't looked sufficiently developed yet to engender an equally nasty C-D follow-through.  However, since this assumption is all we've got at the moment, I'll go strictly by-the-numbers, using the obvious abc coordinates shown in the chart.  They yield a 1090.30 target, subject to a bounce at the 1103.20  midpoint support.  Both numbers would be invalidated by a wee rally surpassing the 1116.20 point 'C' overnight.   Alternatively, and once again, we'll use 1154.00 as a benchmark to alert us if bulls have sprung back to life.

The 1106.90 downside target broached here yesterday is looking increasingly magnetic, along with another at 1111.30 that can be used as a minimum downside target through Thursday.  Alternatively, the futures would still need to hit 1154.00 today or tomorrow to suggest that the tide is about to turn again in bulls' favor.

What the bullish pattern shown in the chart lacks in subtlety it makes up for in robustness.  The pattern is in-your-face obvious, with key resistance at 1074.90 -- a midpoint Hidden Pivot that was missed by 12 points at the top of the last rally cycle. This is not a sign of serious weakness, but neither does it portend an imminent show of strength.  A few weeks of tired consolidation would be congruent with the technical signs, and that is what I am forecasting for now. This bland outlook would be affirmed by weakness  today or tomorrow that breaches the 1126.50 low recorded on Friday.  That number lies within three ticks of a midpoint support at 1126.80, and a close below it would grease the skids down to 1106.90, its 'D' sibling. Alternatively, and very bullish, would be a rally today or tomorrow that hits 1154.00.  That would create a bullish impulse leg on the hourly chart that would be especially encouraging, since it would relegate the corrective abcd to the failure bin.